Coupa Software Inc. reported fourth-quarter fiscal 2021 non-GAAP earnings of 17 cents per share. The Zacks Consensus Estimate was of a loss per share of 11 cents. However, the bottom line deteriorated 19% from the year-ago quarter’s reported figure.

Revenues of $163.5 million outpaced the Zacks Consensus Estimate by 12.3%. Further, the top line improved 47% from the prior-year quarter’s figure.

Subscription revenues (82.5% of total revenues) surged 37% year over year to $134.9 million. Meanwhile, Professional services & other revenues (17.5%) climbed 123.4% year over year to $28.6 million.

The top line benefited from a strong uptake of the company’s Business Spend Management (BSM) and Coupa Pay offerings including Coupa Treasury and Coupa Supply Chain Management. The company is witnessing robust adoption of spend management offerings amid coronavirus-triggered macroeconomic weakness and the work-from-home wave.

Major Highlights

For the fiscal fourth quarter, calculated billings came in at $270 million, up 49% year over year.

Notably, in February 2021, Coupa Software purchased Pana Industries, Inc, which is a well-known corporate travel-booking company.

Management noted that the company was named a “Leader” in six IDC MarketScape reports, namely Procurement, Procure-to-Pay, Spend Analysis, Sourcing, Supplier Relationship Management and Buy-Side Contract.

The company continued to add clients to its customer base in the reported quarter. Some of the notable new deal wins in the quarter include 8x8, AbCellera Biologics, Adverum Biotechnologies, Ball Corp. , Tyson Foods (TSN Quick QuoteTSN - Free Report) , Heathrow Airport, Bank of New Zealand, Carvana, Checkout, Cloudera , Repare Therapeutics, REVOLUTION Medicines, RSG Group, Sigilon Therapeutics, Stuttgarter Straßenbahnen and SUEZ UK.

Increasing customer base is expected to boost investors’ optimism on the stock. Notably, shares of Coupa Software have returned 101.6% in the past year compared with the industry’s rally of 160.7%.

We believe that innovation and product enhancements will enable Coupa Software to capitalize on the opportunity in the BSM market, created by the ongoing digital transformation amid the COVID situation.

However, stiff competition in the Peer to Peer Lending (P2P) market along with weak adoption of Coupa Travel Sabre due to the prevalent pandemic woes induced lower spend on travel. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Margin Details

Non-GAAP gross margin contracted 290 basis points (bps) from the prior-year quarter’s level to 70.1%. This contraction was mainly due to the LLamasoft acquisition.

Non-GAAP Research and development expenses climbed 51.2% year over year to $29.8 million.

Non-GAAP Sales and marketing expenses surged 50.6% year over year to $51.7 million

Non-GAAP General and administrative expenses increased 56.4% year over year to $21.9 million.

Non-GAAP operating income declined 16% year over year to $11.2 million.

Non-GAAP operating margin contracted 520 bps on a year-over-year basis to 6.8%.

Balance Sheet & Cash Flow

Coupa Software had cash and cash equivalents and marketable securities of $606.32 million as of Jan 31, 2021 compared with $1.354 billion as of Oct 31, 2020. This decrease was due to the payment made toward the LLamasoft acquisition.

For the fiscal fourth quarter, cash flow from operations came in at $20.4 million compared with $19 million in the previous quarter. Adjusted free cash flow totaled $38.1 million compared with $17.3 million reported in the prior quarter.

Fiscal 2021 Numbers

Coupa Software reported revenues of $541.6 million in fiscal 2021, up 39% from fiscal 2020 tally. The Zacks Consensus Estimate was pegged at $523.86 million.

Non-GAAP earnings per share were 77 cents compared with earnings of 52 cents per share reported fiscal 2020.

For the full fiscal, cash flow from operations came in at $78.2 million compared with $68.2 million in the previous fiscal year. Adjusted free cash flow totaled $113.5 million compared with $56.2 million reported in the prior fiscal year.

Guidance

The revenue guidance for first-quarter fiscal 2022 assumes zero contribution from Coupa Travel Sabre, formerly known as Yapta.

For first-quarter fiscal 2022, revenues are anticipated in the range of $151.5-$152.5 million. The Zacks Consensus Estimate for revenues is currently pegged at $146.07 million.

While Subscription revenues are expected between $133.5 million and $134.5 million, professional services revenues are anticipated to be approximately $18 million.

Non-GAAP loss from operations is estimated in the range of $10-$12 million

Non-GAAP net loss is projected in the band of 18-21 cents per share. The Zacks Consensus Estimate for loss per share is currently pegged at 7 cents.

For fiscal 2022, Coupa Software projects revenues between $675 million and $678 million. The Zacks Consensus Estimate for revenues is currently pegged at $663.97 million.

Non-GAAP loss from operations is anticipated in the range of $7-$10 million.

Non-GAAP loss per share is now expected in the band of 23-27 cents. The Zacks Consensus Estimate for earnings is currently pegged at 30 cents per share.

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